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Sunday, October 25, 2009

Activist investor Carl Icahn has decided his work is done at Yahoo after muscling his way on to the slumping Internet company's board nearly 15 months ago.

In a resignation letter Friday, Icahn said he felt like it was time to leave Yahoo (YHOO) so he could spend more time on his investments in other companies.

"I don't believe that it is necessary at this time to have an activist on the board of Yahoo and currently my attention is focused on other matters," Icahn wrote.

Icahn, an outspoken billionaire, spent several months last year denigrating Yahoo co-founder Jerry Yang and the rest of the company's board after Yahoo turned down an opportunity to sell to Microsoft for $47.5 billion, or $33 a share.

That snub still looks like an expensive mistake, with Yahoo shares closing Friday at $17.22.

Icahn struck a truce with Yahoo to get on the board in August 2008 and he is apparently leaving on an amicable note.

In his letter, Icahn praised Yahoo's current chief executive, Carol Bartz, saying she is "doing a great job." Bartz replaced Yang as CEO nine months ago.

Icahn also applauded Yahoo's decision three months ago to hire Microsoft to provide its search results in the United States for the next decade. It's a partnership that Icahn tried to bring together while he was still seeking to get Yang fired. The proposed alliance between Yahoo and Microsoft still requires regulatory approval.

Yahoo, which is based in Sunnyvale, Calif., also had kind words for Icahn, saying it is "grateful for his active role in shaping the future" of the company.

A Yahoo spokeswoman said there are no immediate plans to fill Icahn's seat on the board. Another director, Maggie Wilderotter, plans to step aside at the end of the year.

After Wilderotter's departure, Yahoo will be left with 10 directors, including Yang. Two of other directors, John Chapple and Frank Biondi, joined the board as Icahn's allies.

Icahn remains one of Yahoo's largest shareholders with a 4.5% stake that is currently worth slightly more than $1 billion. He and his investment affiliates spent $1.8 billion accumulating a 5.5% stake last year, but whittled the holdings two months ago by selling 12.7 million shares.

His resignation letter gave no indication whether he plans to sell more of his Yahoo stock now that he has left the board.

Yahoo's fortunes have been sliding for the past three years as Google SEO widened its lead over Yahoo SEO search market and people began spending more time at other popular online hangouts such as Facebook.

Earlier this week, the company announced that its third-quarter earnings more than tripled as cost cutting helped to offset a 12% decline in revenue. The revenue erosion wasn't quite as bad as earlier this year, raising hopes that the company will fare better as the U.S. economy pulls out of its worst recession in 70 years.

Saturday, October 24, 2009

Sergey Brin Drops In On The Web 2.0 Summit

From Information Week

Sergey Brin decided to drop by the Web 2.0 Summit on Thursday afternoon to spend a few minutes chatting with program chair John Battelle. You can do that sort of thing when you're the co-founder of one of the most successful companies in the world.

Wearing what looked like a pair of Vibram Five Fingers -- feet-like shoes that cover toes separately, the way gloves fit fingers -- for a sprained ankle, Brin fielded questions about various aspects of Google's business.

Asked how the Twitter deal -- Google yesterday said it would include tweets in its search results -- went down, Brin acknowledged being aware of the deal without providing details. He said he was excited to see Twitter co-founder Evan Williams succeed twice -- Williams co-founded Blogger, which Google later bought.

'It's reaffirmed the difference an entrepreneur can make," he said.

Asked if he tried to buy Twitter, Brin responded, "I did not try to buy Twitter," which isn't quite the same thing as stating that Google did not try to buy Twitter.

Asked to elaborate on Google SEO plans as the Web's referral economy becomes more social, Brin merely challenged the way the question was framed. "I would dispute the notion that Google dominated the economy of attention," he said, insisting that users in the past arrived at Google and left quickly.

Brin offered only the vaguest of guidance about the company's prospects in the display advertising business. Internet ad rates will go up, he said, but declined to be more specific than characterizing the situation as "a rising tide."

Brin did offer some insight into Google's approach to product development. "Primarily, we've entered areas where we run into a problem," he said, citing Gmail and Android as attempts to improve on bad Web e-mail systems and cumbersome mobile platforms.

Brin revealed that he used Bing, at least on occasion. "I use all search engines out there," he said. "What Bing has reminded us is that search is a very competitive market." He also said it was a shame that Yahoo appeared to be turning away from search.

Brin dodged a question about whether Google would release its own phone hardware. "I'll leave those questions to [Google mobile platform director] Andy Rubin," he said.

Responding to the newspaper industry's gripe that Google is the source of the newspaper industry's financial trouble, Brin said, "I think they are conflating Google with change."

Brin expressed regret that Google Chrome hasn't been released for the Mac. Brin said that he was using an early version of Chrome for Mac and that users can try it for themselves if they go past Google's Web page warning users not to download the still-buggy development build of Chrome for the Mac.

Finally, Brin said he didn't expect the resistance that Google has faced over its Google Book Search project. "We get criticized kind of for everything but I've been surprised at the level of controversy there," he said, adding that he was nonetheless optimistic that Google will be able to bring the service to market.

Tuesday, October 20, 2009

Yahoo Coders Cut Loose. A Little Too Loose.

From Silicon Valley Insider

Honest, honey, she was just showing me her social networking APIs: What happens at Taiwan Open Hack Day, unfortunately for Yahoo, doesn't stay at Taiwan Open Hack Day. Chris Yeh, head of the Yahoo Developer Network, found himself Monday in the uncomfortable position of apologizing for some of the extracurricular festivities at last weekend's codefest after pictures emerged on Flickr showing some of the attending geeks on stage getting lap dances from the minimally clothed "Hack Girls."

"I wanted to acknowledge the public reaction generated by the images of female dancers at our Taiwan Open Hack Day this past weekend," Yeh wrote. "Our hack events are designed to give developers an opportunity to learn about our APIs and technologies. As many folks have rightly pointed out, the 'Hack Girls' aspect of our Taiwan Hack Day is not reflective of that spirit or purpose. And it's certainly not the message we want to send about our values here at Yahoo. Hack Days are about making everyone feel welcome, including women coders and technologists. This incident is regrettable and we apologize to anyone that we have offended. Rest assured, it won't happen again."

What Yeh failed to mention is that it happened before, at last year's event, and apparently nobody at Yahoo thought twice about a return engagement. Only the exposure of the exposure prompted a promise to reform.

Sunday, October 18, 2009

Google Now Needs ATV's For Street View

Story from Mercury News

Mountain View Internet juggernaut Google is using a camera-equipped tricycle to photograph off-road locations for its Street View service, and it's asking for nominations of places the Street View trike should visit.

"My day job is working as a mechanical engineer on the Street View team, but I do a lot of mountain biking in my spare time," Ratner continued. "One day, while exploring some roads less traveled, I realized that I could combine these two pursuits and build a bicycle-based camera system for Street View."

Google already has photographed California sites including the Monterey Bay Bike Trail, the Santa Monica Pier and the San Diego State University campus to improve Google SEO for maps.

The company is accepting suggestions until Oct. 28 at www.google.com/trike for other U.S. locations to photograph — including parks and trails, university campuses, pedestrian malls, theme parks and zoos, landmarks and sports venues.

Google said it will need to work with property owners to use the Street View trike to photograph privately owned or operated locations.

Thursday, October 15, 2009

Kraft Foods, Greyhound Lines and Capital One Financial have bought some strange ads on the Internet lately. What's so strange about them is that they're invisible.

The companies might not have known about their invisible display ads—the kind that are supposed to appear alongside content on Web pages—if not for Ben Edelman, an assistant professor at Harvard Business School who studies Internet advertising.

Mr. Edelman says his research shows that all three marketers, and many others, have fallen victim to Web sites that use such ads as a way to sell more ad space than they have.

The Web sites can get away with it, he says, because online advertisers don't always audit their campaigns for proof their ads are appearing. It isn't clear how common these ads are or how much they cost marketers.

Mr. Edelman and other Internet-security experts say the ads are created with the use of computer code that makes it look to marketers as though their ads are showing up on legitimate Web sites. But consumers who visit those sites can't see the ads because they have been placed on invisible Web pages.

In one example, visitors to a site called MyToursInfo.com saw an ordinary-looking Web page with one ad for Verizon Communications and another for a weight-loss product. But, Mr. Edelman, who studied the site in January, said software code running behind the scenes opened more than 40 Web pages, each including three ads from marketers such as Domino's Pizza and Capital One, which were invisible to visitors.

Mr. Edelman's analysis of the code was confirmed by computer-security experts at Symantec and McAfee as well as online-ad advisory firms DoubleVerify and Anchor Intelligence.

MyToursInfo.com has since shut down, and efforts to identify its operators were unsuccessful.

Domino's Pizza says it is aware of sites like MyToursInfo.com and is taking steps to protect against them by buying display ads it pays for only when a consumer clicks on them. Capital One said it wasn't familiar with the situation but said it keeps "a close eye" on its online ads.

Verifying that ads appear is an issue that has long plagued traditional media, particularly commercials on local TV stations. But a single online ad campaign can appear on thousands of Web sites, making verification even harder.

Advertisers often buy display ads based on the number of times they are loaded onto a page, rather than the number of clicks they get. Over the past, year, an increasing number of scams have sought to take advantage of that pricing system as advertisers have started buying more of their online ads via middlemen called ad networks, instead of directly from the Web sites themselves. These networks sell ad space at cheap rates across thousands of sites, and they don't always weed out illegitimate players.

Several such networks, including Burst Media and Tribal Fusion, sold ads that appeared on the MyToursInfo.com site, Mr. Edelman says, according to his analysis of computer code.

Tribal says MyToursInfo.com isn't included in its network now but can't say whether it was in the past. Burst says MyToursInfo.com was included in its network earlier this year but isn't now part of its network.

The ad networks say they use a combination of high-tech scans and manual processes to ferret out unscrupulous sites.

"Unfortunately, these bad actors are kind of like ants at a picnic. You constantly have to be vigilant," says Chuck Moran, Burst Media's chief marketing officer.

"It is one of the big challenges of running a network," says Toby Gabriner, president of Tribal Fusion. He said his company now is working with Mr. Edelman to help detect possible fraud across its network. Mr. Edelman does similar consulting work for clients including Time Warner's AOL and Microsoft.

Ads are typically rendered invisible by manipulating computer codes called iframes that determine how a Web page appears on a visitor's computer screen. Iframes allow one Web page to be built inside another, the procedure used to make display ads. But, programmers can also make iframes invisible, so that computer users don't see anything contained in them. In the case of the invisible ads, they typically use multiple invisible iframes. In the case of the invisible ads, they typically use multiple invisible iframes.

Mr. Edelman, who trolls the Web for examples of invisible ads, says ads for Kraft Foods and Greyhound Lines recently ended up buried on invisible pages on a site called MyProfilePimp.com, which offers games, photos and other ways for consumers to personalizetheir profile pages on social-networking sites like Facebook. Mr. Edelman says a visit to the site in June opened a series of invisible pages on the visitor's computer with as many as 46 ads. He says none of those ads could be seen.

MyProfilePimp.com declined to comment.

Kraft says it monitors its online ad purchases but wasn't aware of the MyProfilePimp.com ads. "We are looking into it as we would with any other possible violation of our agreements," it said.

Greyhound was similarly unaware of the case and said that the site shouldn't have been included in any of its ad-network buys. A spokeswoman says the bus line is working to "safeguard against fraudulent activity moving forward."

Google reported a 7 percent jump in revenue for its third quarter, bouncing back from a virtually flat second quarter, and chief executive Eric Schmidt said the Mountain View search giant will start hiring again.

And, in its first effort to make money off its book-scanning project, Google announced a service to sell electronic versions of books for download to computers, phones and possibly e-readers. Google Editions will start with 400,000 to 600,000 books in the first half of next year, said Google's Tom Turvey, making the announcement at the Frankfurt Book Fair.

Wednesday, October 07, 2009

AOL Hiring Ex-Google, Ex-Yahoo ExecsStory from eBrands

New York -- The Googlization of AOL's top brasses continues. AOL, the struggling Internet unit of Time Warner, on Tuesday announced the appointment of another Googler veteran… The latest is former YouTube monetization head “Shashi Seth,” who will now serve as SVP for Global Ad Products at AOL.

In his new position, Seth will be responsible for managing the company's sprawling family of advertising and monetization technologies, where he will be entrusted with building and scaling AOL's advertising platform and developing new products. He will also have global oversight of Advertising.com and the company's other display ad products. He will report to Jeff Levick, president of global advertising strategy. Levick himself is a recent recruit from Google, as is Tim Armstrong, AOL's chief executive.

Seth supersedes Eric Bosco, who had worked at AOL since 1996. Bosco was the main architect of AIM and headed the company's communication products before moving to Advertising.com. He is the latest in a group of execs to depart AOL. The move comes as AOL CEO Tim Armstrong and his deputy Jeff Levick hasten to remake the company's leadership in their image ahead of its public spin-off by year's end, who has brought in a number of his former Google colleagues.

Barely two weeks back, the company bid farewell to COO Kim Partoll and John Kanapell, SVP, AOL Search and Directional Media. And it hired former Yahoo exec Brad Garlinghouse as president of Internet and mobile communications. In addition to Levick, Armstrong has also recently added Caroline Campbell in PR, while this summer, the search giant's agency liaison Erin Clift took on newly-created post of SVP for global sales development.

Time Warner appointed Armstrong in March and plans to spin off AOL into an independent unit by the end of the year. Armstrong has said he wants to refocus AOL around online content, display advertising and a handful of other businesses. That is likely to put AOL in a collision course with larger rivals, including Yahoo and, to a lesser extent, Google.

“As we move forward on our strategy of becoming the world's largest provider of display advertising, Shashi will play a critical role in creating the best products in the business for our advertising partners,” Levick said in a press release.

Seth comes to AOL from Cooliris, which creates products for image and video browsing, where he served as chief revenue officer. Prior to that he was with Google, where he served most recently as head of monetization for YouTube till June 2008.

“I'm grateful to have the opportunity to come to AOL as it moves toward becoming an independent company,” said Seth. “The company already has an incredible combination of scale and a suite of great advertising products and technology.”

Seth's line of descent includes work on major online platforms for several big retailers and Web companies, including Gap, eBay, Google, and YouTube. At YouTube he led the development team behind the video platform's in-video ad formats. After leaving there in May 2008, Seth served as chief revenue officer for rich media technology firm Cooliris. He will be based at AOL's expanding Mountain View offices, joining another recent high profile hire, Brad Garlinghouse, who was just tapped to head AOL’s Communications efforts and manage the company’s West Coast AOL Ventures efforts.

“All the biggest ad platforms that are out there, he has been a key contributor to,” Levick said. “Him coming here is a huge opportunity for us.”

The mix of hirings and firings are expected to continue at AOL through early next year, though the changes will be more at the margins. According to Levick, Seth's appointment also signals a renewed focus on recruiting on the West Coast -- in particular Silicon Valley. He said having a bigger presence in the Bay Area is “a way to attract top product talent.” Levick noted AOL has two Mountain View offices, which it is looking to consolidate into one.

This marks AOL's latest in a flurry of recent management changes. Along with Garlinghouse -- a former Yahoo executive, Seth is at least the fourth senior Googler to be recruited by AOL. In addition to Armstrong and Levick, the company also dipped into the Google talent pool to find its new SVP global sales development, Erin Clift.

Prior to Google, Seth was with eBay, where he was responsible for building and managing eBay's APIs and platform.

Tuesday, October 06, 2009

U.S. Backs Google, Consumers In Bandwidth FightStory from the Wall Street Journal

The U.S. government plans to propose broad new rules Monday that would force Internet providers to treat all Web traffic equally, seeking to give consumers greater freedom to use their computers or cellphones to enjoy videos, music and other legal services that hog bandwidth.

The move would make good on a campaign promise to Silicon Valley supporters like Google Inc. from President Barack Obama, but will trigger a battle with phone and cable companies like AT&T Inc. and Comcast Corp., which don't want the government telling them how to run their networks.

The proposed rules could change how operators manage their networks and profit from them, and the everyday online experience of individual users. Treating Web traffic equally means carriers couldn't block or slow access to legal services or sites that are a drain on their networks or offered by rivals.

The rules will escalate a fight over how much control the government should have over Internet commerce. The Obama administration is taking the side of Google, Amazon.com Inc. and an array of smaller businesses that want to profit from offering consumers streaming video, graphics-rich games, movie and music downloads and other services.

Julius Genachowski, head of the Federal Communications Commission, is also expected to propose in a speech Monday, for the first time, that rules against blocking or slowing Web traffic would apply to wireless-phone companies, according to people familiar with the plan.

Wireless carriers, which have been among the fiercest opponents of such regulation, continue to restrict what kind of data travels over the airwaves they control. For example, earlier this year, AT&T restricted an Internet-phone service from Skype so iPhone users couldn't place calls on AT&T's cellular network. At the time, AT&T cited network congestion concerns.

"We believe that this kind of regulation is unnecessary in the competitive wireless space as it would prevent carriers from managing their networks -- such as curtailing viruses and other harmful content -- to the benefit of their consumers," said Chris Guttman-McCabe, vice president of regulatory affairs for CTIA, the wireless industry's trade group.

If the FCC does force U.S. wireless carriers to open their networks to data-heavy applications like streaming video, it could push them beyond the limited capacity they have. Already, in areas like New York and San Francisco, a high concentration of iPhones has caused many AT&T customers to complain about degrading service.

In such a scenario, wireless carriers may have to rethink how much they charge for data plans or even cap how much bandwidth individuals get, said Julie Ask, a wireless analyst at Jupiter Research.

The FCC's proposal will take into account the bandwidth limitations faced by wireless carriers, according to people familiar with the plan, and would ask how such rules should apply to current networks.

The rules could encourage big Internet companies to launch new data-intensive services by establishing that their traffic can't be slowed or blocked. In the business market, companies that make Internet-phone services or video-conferencing software may invest more heavily in those services, some analysts say.

The rules are likely to be a big boon to smaller tech companies, like Silicon Valley start-ups and small makers of mobile software for Apple Inc.'s iPhone and other devices, that wouldn't be able to afford paying Internet providers for special access.

"Any company or piece of software that becomes popular, generating a lot of traffic, would tend to benefit," said Jonathan Zittrain, the co-founder of the Berkman Center for Internet & Society at Harvard University.

The FCC has four "net neutrality" principles, which call on Internet providers to avoid restricting or delaying access to legal Internet sites and services. Carriers are permitted to block access to illegal services and sites.

Mr. Genachowski is expected to propose the agency clarify its current principles and turn them into formal rules. He will also tack on a new one, which would require carriers practice "reasonable" network management. The agency will ask for guidance on how to define "reasonable."

Most Internet providers have resisted "net neutrality" rules in the past, saying they have a right to control traffic on networks they own and it's not a good idea for the government to micro-manage Internet traffic.

Phone companies including AT&T have argued that they can live with the FCC's existing principles, but they've argued there's no reason to put more formal rules put into place.

The proposals come as the FCC faces a federal appeals court case over its authority to regulate Web traffic. Comcast is fighting an FCC decision last year to ding it for violating the agency's "net neutrality" principles when it slowed traffic for some subscribers who were downloading big files. Comcast said it didn't violate any rules because the FCC had never formally adopted any, but it did change how it manages its network.

Republicans are likely to oppose the FCC's new proposal -- both at the FCC and in Congress -- arguing that the FCC is trying to fix problems that don't exist and that the agency should take a more hands-off approach to the fast-changing industry.

"With only a few isolated instances of complaints alleging net neutrality-like abuses ever having been filed, it is a mistake," said Randolph May, president of Free State Foundation, a free-market oriented think tank.

The concept of network neutrality originated with the nation's longtime telephone monopoly. AT&T and its successors were prohibited from giving any phone call preference in how quickly it was connected. Since the Internet was born on phone wires, the concept survived into the Internet age largely by default.

That notion was challenged toward the end of the 1990s, as cable companies began offering Internet service. Cable companies argued since they were content companies not phone companies, the principle of network neutrality didn't apply to them.

Phone companies responded by getting into the content business as well, with television service. As a result, both the cable companies and phone companies had incentives to create conditions on the Internet -- either through pricing or slowing or speeding up certain sites -- to favor their own content.

In 2005, the FCC deregulated the Internet business, by ruling that Internet providers were communications companies and not phone companies and, importantly, were therefore no longer subject to the old phone rules such as network neutrality.

The FCC instead created its four "guiding principles" for protecting network neutrality. They were vague enough to embolden those looking for ways around it. Major phone companies like AT&T subsequently said they were considering creating "fast lanes" on the Internet, available at a higher price -- plans they put on hold amid an outcry.

Now, by codifying the principle, the FCC is seeking to limit erosion of network neutrality.

Mr. Genachowski is expected to set plans to open a formal rule-making process on the issue at the FCC's October meeting. The rules would have to be approved by a majority of the FCC's five-person board; whose three Democrats support net neutrality.

Saturday, October 03, 2009

The rivalry between AOL and Yahoo is on prominent display this week, as the two struggling Internet companies compete for advertising dollars on Madison Avenue.

They are pouring on the glitz as they vie for the attention of thousands of ad-industry professionals at the Advertising Week conference in New York.

Marketers typically don't negotiate specific deals to buy ad space or time during the annual event. But media companies use it to tout themselves to the many ad agencies and advertisers in attendance, including Coca-Cola, Procter & Gamble, Verizon Communications, Bank of America and MasterCard Worldwide. The aim is to establish relationships and secure business down the road.

"It's a fevered pitch," says Quentin George, chief digital officer of Mediabrands, a media-buying unit of Interpublic Group, whose major clients include General Motors, Microsoft and Johnson & Johnson. "Both Yahoo and AOL are in some kind of a turnaround, and what we are seeing is efforts on both sides to get a clear and compelling value proposition for agencies."

The stakes are high for the two companies. Their ad revenues have suffered steep declines during the recession, hurt by a pullback in ad spending and stiff competition from established rivals like Microsoft and Google, as well as social-networking upstarts like Facebook.

Both AOL and Yahoo are setting their sights on the hard-hit $20.8 billion-a-year market for online display ads -- those that include text and images and appear on Web pages. This year, they both hired new chief executives, who are scrambling to revive their businesses.

Early in the week, the two companies laid out the details of their business strategies. AOL Chief Executive Tim Armstrong, a former Google ad-sales executive, pitched the company's efforts to become a top provider of online news and entertainment. Yahoo chief Carol Bartz, the former CEO of software maker Autodesk, unveiled a $100 million global ad campaign to spur interest in the company's Web site.

But winning ad dollars is also about getting face time with Madison Avenue's heavy hitters, which means gimmicks and parties.

AOL, which is being spun off by Time Warner this year, spent more than $250,000 to be a top sponsor for the conference and host the opening-night gala Monday in a tent in Times Square, according to a person familiar with the matter. The bright-yellow AOL running-man mascot popped up at several events during the week, and it won a vote to be inducted into the Advertising Walk of Fame, beating out 25 rivals, including Ronald McDonald and the Vlasic Stork.

Yahoo took more of a stealth approach, forgoing the traditional Advertising Week sponsorship for marketing stunts. It hired drivers in skinny purple Yahoo neckties to take attendees home from parties in Chrysler 300 sedans with purple stripes, and it sent teams into the streets in Yahoo T-shirts.

At AOL's gala, Yahoo ad-sales executive Joanne Bradford was overheard reminding people to join her at a private Yahoo cocktail party at Jean Georges, a tony Manhattan restaurant. Several ad executives say they had drinks and hors d'oeuvres at the Yahoo event, attended by Ms. Bartz, and then left to join Mr. Armstrong and his ad team for a private dinner, where singer Harry Connick Jr. gave a surprise performance.

Mr. Armstrong sent a personal email invitation to Curt Hecht, president of Vivaki Nerve Center, a unit of Publicis Groupe that buys hundreds of millions of dollars of online advertising a year for companies such as P&G and Wal-Mart Stores. Mr. Hecht says Mr. Armstrong spent an hour with him before the dinner started, asking about the agency business and his clients. Although no checks changed hands, Mr. Hecht says, "I'm going to invest back in that."

Some industry executives say the market for display ads is still up for grabs. "It's been a while since there has been a default 'must buy' property," says Jeff Lanctot, chief strategy officer at Razorfish, the digital-ad agency Publicis is buying from Microsoft.

Yahoo may be under extra pressure to dazzle executives, as some of them say AOL has started to resurrect its relationships with marketers and their agencies. Still, Yahoo draws more traffic to its sites

"Yahoo's a safe bet, for advertisers because it has such a massive audience," says Tom Bedecarre, chief executive of AKQA, an independent digital marketing agency whose major clients include Coke and Visa.

But with ad spending on traditional media like print and TV in decline, both AOL and Yahoo could be winners if they do a good enough job, ad executives say.

"In order for either or both of th em to prosper, particularly AOL, they have got to do more than play an intrachannel share game," says Rob Norman, CEO of WPP-owned digital-media firm GroupM Interaction. He said the traditional-media business might need to up its ante. "It's Advertising Week. Where is the TV business? Where is the magazine business?"

Thursday, October 01, 2009

Google Turns 11 With An Eye On MicrosoftStory from SF Gate

Eleven years ago, Larry Page and Sergey Brin founded Google Inc. with a search engine and a plan. Now their company has grown into an online behemoth battling head-to-head with industry giant Microsoft Corp. while the term Google is a verb that means Internet search.

Obviously, a lot has changed for the company and its founders since Sept. 27, 1998.

Google celebrated its anniversary this year quietly, doing little more than changing the famed doodle on its search page from the usual Google to Goog11e .

But whether it celebrates its birthday or not, Google is one of the great Internet success stories to date. The company not only owns the search market with a share of more than 64%, it has branched out over the years with its hosted Google Apps applications like Gmail along with Google Maps , Google Earth and other products.

More recently, Google has moved to take on Microsoft and its widely-used Internet Explorer in the browser business, and even disclosed plans this summer to develop an alternative to the Windows operating system. Just yesterday, Google announced plans to release an early version of its Google Wave collaboration tool to 100,000 users and developers for testing.

"I would say Google is the most influential Web company out there," said Ezra Gottheil, an analyst with Technology Business Research Inc. "It's rare to have a company grow like that, but we've seen others. It's just that the others either flamed out, were acquired or haven't yet reached a sustainable state. Look at Netscape, MySpace, Twitter, Youtube and Facebook."

Caroline Dangson, an analyst with IDC, noted that in a survey undertaken by the research firm last year, Google was easily the top consumer brand.

"We have found that with consumer surveys, [Google] is the number one consumer brand," she added. "We conducted a survey including Yahoo, MSN, eBay, Amazon ... different consumer Web properties. Google was number one for all of our questions, from 'How much do you like the brand?' to 'How much do you use the brand?' to 'How much do you trust the brand?' There are few companies that are able to grow and dominate in this way."

Google has grown to the point where it's become a threat to Microsoft , which has had a long and storied history of high-tech industry dominance. There was a time not so long ago when few believed that any company could rattle Microsoft, let alone a Web company like Google .

But Google's vice-like grip on the lucrative search market forced Microsoft to spend massive amounts of money to overhaul its old and unexciting Live Search engine to create Bing , which was unveiled this summer. Microsoft went a step further by signing an agreement that calls for Internet pioneer Yahoo Inc. to use Bing as the primary search engine on its various sites.

At the same time, Google was developing its Chrome browser to take on IE, and was looking to develop an operating system to compete with Windows.

The Chrome browser , unveiled about a year ago, hasn't hurt Microsoft yet, but the company isn't giving up. Last week, for example, Google released a plug-in called Chrome Frame that lets users embed the Chrome browser into IE. The plug in, which is said to boost IE's browser's notoriously slow JavaScript speed, drew a quick response from Microsoft , which warned that it could cause security problems for users.

Google in July announced plans to take on Windows with an open-source operating system, also called Chrome, that could run Internet-centric computers like netbooks as early as the second half of next year. Many other companies have tried and failed to take on Microsoft in the operating systems business, but analysts say that Google has the financial muscle, the engineering might and the industry clout to actually put up a realistic fight for market share.

Google also moved this summer to make its hosted applications suite more attractive to large government users by announcing plans to tailor its cloud computing services for various federal agencies.

"In Microsoft's mind, Google is probably the biggest threat to their bread-and-butter operating system and desktop application businesses," said Dan Olds, an analyst with The Gabriel Consulting Group. "Google's dominance of the search business is also Microsoft's biggest opportunity in terms of new revenue and revenue growth. So to a large extent, the two companies are going to do battle on several fronts, which is good for consumers as it keeps innovation high and prices low, and it's also fun to observe."

Google, with a focus on its core business along with an ingrained innovative track, is also influencing a whole lot of up-and-coming Web 2.0 businesses, according to Olds.

"The Google model of developing a killer application, optimizing it to provide high user value and gain user loyalty, and then monetizing it has been the model of choice for social networking companies. Take a look at Twitter," he said. "Google has gone from zero to industry giant in a record amount of time, starting with just a bunch of guys with a search engine to a company with a $156 billion capitalization in just over a decade. It's a company worth emulating."